No Absolute Right To Replace Attached Immovable Property With FD: Chhattisgarh HC

In a major blow to money laundering accused seeking the release of seized real estate, the High Court has held that litigants cannot claim an automatic right under the Prevention of Money Laundering Act, 2002 to substitute provisionally attached immovable assets with Fixed Deposits.

In a single-judge bench, Justice Bibhu Datta Guru dismissed a writ petition challenging the Appellate Tribunal's refusal to swap attached real estate with liquid security, reiterating that discretionary constitutional powers cannot be used to bypass prescribed statutory appellate channels.

Court's Rationale On Rule 5(5) And Alternative Remedies

The High Court underscored that the statutory framework governing Prevention of Money Laundering Act, 2002 property attachments does not confer an unrestricted right to substitute attached immovable properties with liquid security. The Court noted that Rule 5(5) of the Prevention of Money-laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 operates strictly within the narrow domain of joint ownership, and the word "may accept" used in the rule signifies discretionary power of the authority rather than an unyielding right of the litigant.

The Court, in its reasoning, observed: "The provision, therefore, cannot, on its plain terms, be construed as conferring an unrestricted or general right upon every person whose immovable property has been attached and confirmed to demand substitution thereof by a Fixed Deposit. It is also significant that Rule 5(5) employs the expression “may accept” and not “shall accept”. Thus, even where the contingency contemplated by the provision exists, acceptance of the Fixed Deposit is not couched as an absolute or mandatory statutory entitlement of the person concerned."

Addressing the maintainability of the writ petition, the Court relied on established precedents including Authorized Officer, State Bank of Travancore v. Mathew K.C. ( "(2018) 3 SCC 85": 2018 CaseBase(SC) 723) and Commissioner of Income Tax & Others v. Chhabil Dass Agarwal ( "(2014) 1 SCC 603": 2013 CaseBase(SC) 399) to emphasize that writ jurisdiction under Article 226 of the Constitution of India should not be exercised when an efficacious statutory appeal mechanism under Section 42 of the Prevention of Money Laundering Act, 2002 exists, reaffirming the legal principles articulated in Rikhab Chand Jain v. Union of India & Ors. ( "2025 SCC OnLine SC 2510": 2025 CaseBase(SC) 1325).

The Court has following directions:

"For the foregoing reasons, this Court is of the considered view that no ground has been made out for exercise of the extraordinary jurisdiction of this Court under Article 226 of the Constitution. For the aforesaid reasons, the present writ petition, being devoid of merit, is liable to be and is hereby dismissed."

Background

The petitioners, Hrishabh Soni and Komal Soni, approached the High Court seeking a direction to the Directorate of Enforcement to accept a Fixed Deposit of ₹4,36,05,780/- as substituted security in place of six attached immovable properties. The properties were provisionally attached in connection with alleged irregularities and money laundering involving District Mineral Funds. Following the confirmation of the provisional attachment by the Adjudicating Authority under Section 8(1) of the Prevention of Money Laundering Act, 2002, the petitioners appealed before the PMLAT and moved applications for property substitution.

When the Appellate Tribunal rejected the substitution plea holding that no statutory provision permitted such general replacement outside specific conditions under Rules 5(5) and 6 of the 2013 Rules, the petitioners filed a writ petition under Article 226 of the Constitution of India instead of filing an appeal under Section 42 of the Prevention of Money Laundering Act, 2002. They argued that continued attachment hampered business operations and that offering an equivalent liquid deposit preserved the value of the alleged proceeds of crime under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002. The Court ultimately rejected the petition, leaving the question of attachment validity open for adjudication in the pending statutory appeals.

Case Details:
Case No.: WPC No. 3241 of 2026
Neutral Citation: 2026:CGHC:38263
Case Title: Hrishabh Soni & Anr. v. Deputy Director, Directorate Of Enforcement
Appearances:
For the Petitioner(s): Mr. Satish Chand Verma, Senior Advocate assisted by Mr. Sajal Kumar Gupta and Mr. Nikhil Versney, Advocates
For the Respondent(s): Dr. Saurabh Pande, Advocate

Source: 2026 CaseBase(CTH) 13475